Terms Of Business Flashcards
Learn all about business (57 cards)
1
Q
What is Business
A
The regular activity carried out with the aim of earning profits through production or purchase, production and sale of goods and services with the intention of satisfying human wants
2
Q
Xtics of business
A
- Regular activity
- Exchange motive
- profit motive
- production of goods and services
- satisfaction of human wants
- uncertainity of returns
3
Q
Types of business classification
A
Industry_which is production of goods
Commerce_which deals in Trade of goods and services
4
Q
Aids to trade
A
Banking Transport Insurance Market research-consulting services Ware house Communication Advertising
5
Q
Production industry contains the following
A
Primary industry
Secondary industry
Tertiary industry
6
Q
Primary industry
A
Provision of natural resources or God given gifts
7
Q
Under primary industries we have
A
Extraction
To dig out something in it’s original form eg, gold,silver, diamond
Genetic
Multiplication of God given things eg; fish,
8
Q
Secondary industry
A
Provision of production of artificial product like capital industries, manufacturing industries, construction industry
9
Q
What are finished goods
A
These are goods which are in consumable state
10
Q
Tertiary industry
A
They deal in services Eg law firms Warehouses Banking Insurance Advertising
11
Q
Purposes of business
A
Economic Creation of a customer Make profits Survival (earn a living) Growth (carrier)
Social Protect the environment Fair deal to the society Fair deal to the government Fair deal to the customer
12
Q
Sole proprietorship
A
The sole proprietorship is the kind of business entity that is owned by one person
13
Q
Characteristics or features of sole proprietorship
A
- Management and control
- Unlimited liability
- No separate legal entity
- limited government intervation
- Creation (requires minimum requirements)
- profit or losses distribution
- Capital or financing
- Duration
- Taxation
- Reporting requirements (none)
14
Q
Formation of sole proprietorship
A
Obtain a license or permit for the particular type of business from regulatory bodies
Decision are all made by one person
15
Q
Advantages of a sole proprietorship
A
- Direct motivation
- it is flexible
- secrecy
- has complete control
- no corporate tax payments
- few formal business requirements to establish and dissolve
- easiest type of business organization to establish
- the start up cost are minimal
16
Q
Demerits or disadvantages of sole proprietorship
A
- Lack of collateral security hence borrowing is limited
- poor decision making/limited managerial skills
- demotivation because of unshared losses
- poor or no book keeping
- owner has unlimited liability both the owner and the assets are subjected to the claims of creditors
- uncertainity of duration
- it is difficult for a sole proprietor to raise capital
17
Q
Partnerships
A
A relationship that exists between two people with the view of making promises
18
Q
Who can be a partner
A
Any person who is legally capable of contractual capacity that is sane financially sound
19
Q
Characteristics of partnerships
A
- Non transferability of shares
- plurality of members for professions of banking,lawyers 2-50. Standard partnership is 2-20
- contractual agreement usually between two people
- Unlimited liability
20
Q
Formation of a partnership agreement
A
In Uganda partnerships are registered by the partnership act 2010
21
Q
Partnerships agreement is done by the following
A
- Word of mouth
- writing (partnership deed)
- Implication (implaied agreement)
- holding out
22
Q
Partnerships deed
A
An agreement that spells out the right and obligations of each of the partners made out by the partners and witnesses by a solicitor
23
Q
Content of a partnership deed my
A
- Mode of sharing the profits
- Name and signature of partners
- interest on capital and drawings
- winding up/ changes and dissolutions
- nature of business
- capital contribution per partner
- preparation and auditing of accounts
-the ratio in which profits/losses will be shared - Amount,if any partner may draw in advance
- Partner’s salary
- Admission of new members
Duration of partnership
24
Q
Types of partners
A
- General partnership
- limited partnership
- limited liability partnership
25
General partnership
Where all partners participate in management of the business and each partner is liable for all business debts or losses
26
Limited liability
Partners are not actively involved in the day to day running of the business
They have limited liability
27
Limited liability partnership
Partnership where all partners have limited liability
| They are not responsible for the debts and liabilities of the debts and liabilities
28
Types of partners
- Active partners
- dormant/sleep partners
- Nominal / quasi
- minor partner
- Partner in profits only
- Sub partners
Partners by Estoppel or holding out
29
Active partners or regular or ordinary or ostensible
Participate actively in management of business and are liable to third parties
30
Domant or sleeping partners
One who does not take part in the management of the business
Contributes capital and shares the profits
Liable for all the debts
31
Nominal or quasi
Does not contribute any capital nor shares in the profits or take part in the management of the business
He is liable to third parties
He or she is known to outsiders and earns good will for using his or her name as a partner
32
Minor patner
A partner below the contracting age
| Enjoys limited and his decisions are not legally binding
33
Partner in profits only
Partner who shares on profits only without being liable of the losses
Doesn't take part in the active management of a business
34
Sub partners
This is a stranger sharing the profits derived from the firm
| Shares profits with one of the partners and has no rights against the firm
35
Partner by Estoppel or by holding out
One who without being a partner conducts himself in such a way that leads third parties to believe he is a partner
36
Advantages of partnerships
- Going concern or survival capacity
- increased capital
- better management skills
- More access to credit
- Losses are shared
- Relatively easy to form and dissolve
- Few government regulations
- relative flexibility in management
- relatively easy decision making
- limited liability of some partners
37
Disadvantage or demerits of partnership
- Unlimited liability of some people
- a mistake by a partner will affect other partners
- less secrecy
- relatively limited resources
- non transferability of interest
- relative delays in decision making
- possibility of instability
- demotivation (sharing of profits)
38
Factors that could lead to termination of a partnership deed
- Agreement
- Departure
- Dismissal of a partner
- failure to observe the regulations
39
Joint Stock Companies
A voluntary association of individuals for profit incorporated into transferable shares of a fixed face value the ownership of which is the condition of membership,with limited liability, perpetual succession and a common seal.
40
Features of a company
- Compalsary incorporation
- voluntary association
- artificial person
- separate legal entity
- common seal
- limited liability
- transferability of shares
- perpetual succession
- separation of ownership and management
_ large membership
41
Compulsory incorporation
A company is a voluntary association of persons formed
| Only when there is a certified then it comes into existence
42
Voluntary association of in cooparation
Two or more people come into existence with the aim of carrying out a business under the companies act
43
Artificial person
A company is an artificial person created by law
44
Separate legal entity
Since a company is created by law it has a separate legal existence compared to it's members
45
Common seal
Since a company is an artificial person having no physical features like a natural person,it cannot sign
However each company has to have a common seal of on which the name is engraved
46
Limited liability
The limited number of a company is limited to the face value shares held by them or amount guaranteed
47
Transferability of shares
The member who holds the shares of the company can transfer it's own to any other without the company's permission
48
Perpetual succession
Since the company has separate existence from it's members any emagancy like death will not affect the continuations of the business
49
Separate ownership and management
In a company the ownership and the management are separated. Share holders who are owners do not take part in the every day share
50
Large membership
The company is owned by a longer number of members this explains better the 100 persons for Private limited companies and unlimited number for unlimited companies
51
Types of companies
- Companies limited under the royal chatter
- companies limited under the companies act
- companies in comparated under the statute /acts of the parliament
52
Companies incorporated under the special/royal charter
These are companies most of which originated from the UK under the permission of the queen of England/special charter
53
Examples of the companies incorporated under the royal chatter
British South African companies
Imperial British East African company
British East Indian Company
54
Companies incorporated under the company's act
In Uganda the companies Act lays down procedures into which a company can be brought in to existence
55
Types of companies incorporated under the company's Act
Companies limited by shares
Companies limited by guarantee
Unlimited companies
56
Companies limited by shares
These are companies where liability of members is limited to the face value of the shares they own
57
Examples of companies limited by shares
Private limited companies
Public limited companies
Government Companies
